Manufacturing Sector ‘Set To Return To Growth’

A surprise increase in production output shows that manufacturing is “turning the corner” and is set to return to growth, according to a business group

Official figures revealed that output is estimated to have increased by 1.6% in April compared with the same month last year.

There were increases in all main sectors, with the largest in manufacturing, which was up by 0.8%.

Total production output is estimated to have increased by 2% in April compared with March, the biggest jump for four years.

Zach Witton, deputy chief economist at the EEF manufacturers’ group, said: “Whilst the size of the gain is surprising it generally fits with the picture that the worst may now be behind the sector.

“It also backs up the feeling that there are no concrete signs that uncertainty associated with the upcoming referendum has had a major impact on manufacturing.

“Across manufacturing sectors, the story was more positive than in recent months with further evidence that the weakness of those embedded in the oil, gas and steel supply chains is bottoming out.

“Overall, while month-on-month data can be volatile, today’s data suggests that manufacturing is turning the corner and looks set to return to growth in the second half of this year.”

A study by the GMB union showed that manufacturing output was still 6% below pre-recession levels, with 385,500 jobs lost since 2008.

The biggest falls were in the North West, London, the South East and Scotland.

David Kern, chief economist at the British Chambers of Commerce, said: “After a long run of disappointing results, April’s stronger than expected figures should provide a much-needed boost to confidence at a time when most economic figures published recently have been disappointing.

“But there is no room for any complacency. Manufacturing output is still below its pre-recession level, and longer-term trends show that the sector is struggling.

“This is unsurprising given current adverse global economic conditions, but the latest figures show that there are still areas of strength in British manufacturing that must be supported.

“A healthy manufacturing base remains critical to the well-being of our economy in key areas such as exports, productivity and innovation.”

Within the manufacturing sector, output was mainly boosted by growth in the production of pharmaceutical products and transport equipment.

The figures were also boosted by the continuing success of the motor industry, with 150,000 cars built in April – up 16.4% on a year earlier – helping to offset the crisis in the UK steel industry, which contracted by 0.7% in April compared with the previous month.